Crowd-Funded Concerts Catch On in China

On a recent weeknight in Beijing, about 800 people gathered at a club in downtown Beijing to watch a performance by pop singer Li Quan and Li Daimo, a singer made popular by the “Voice of China” TV show. At home, several hundred more participants were tuning into the concert live from their computers or smartphones.

The concert was organized by Xiami, a Hangzhou-based online music portal owned by e-commerce giant Alibaba Group, in its first such initiative using crowd-sourced funding via Alibaba’s Taobao online shopping platform.

Xiami first proposed the concert on Taobao in late November, saying it would go forward if organizers could raise at least 100,000 yuan ($16,520) from online ticket sales in about a month. Tickets ranged from 1 yuan to watch the concert live online to 280 yuan to see it in person and 2,999 yuan to request a song in the show.

Li Quan performs at a crowd-funded concert in Beijing.

Xiami

The company said the project reached its fund-raising goal in less than 15 days, with more than half of participants choosing to watch the show online.

Crowd funding is a practice by which a project or venture is funded by small amounts of money from a large number of people. The idea for using it in the music industry isn’t new: In the U.S. ArtistShare, which launched in 2003, so far has fan-funded recordings that have earned six Grammy awards and 21 nominations. Meanwhile, Kickstarter, the world’s leading crowd-funding platform that launched in 2009, has so far received pledges from 5.4 million people worth $933 million to fund 54,000 creative projects in areas like music, film and technology.

In China, crowd funding for music and other creative projects is gradually catching on. The country’s first crowd-funding website, DemoHour, was launched in 2011 and was followed by a dozen other similar sites, most of which fund creative projects. But the entrance of e-commerce giant Alibaba, with its massive audience, is expected to give a boost to such projects in the arts industry.

“We are happy to see such a giant company start to get involved in crowd funding, as it may help to attract more capital to this market,” said Zhao Hongwei, CEO of musikid.com, a year-old crowd-funding website for music projects. The company has so far pledged about 1 million yuan, with 110 projects online.

Xiami’s founder said he was inspired to start the venture because problems plaguing China’s music industry, including notorious piracy, have made it difficult for local musicians to make a living.

“When I talked to local musicians, I found they couldn’t even earn enough money to cover their transport fee for tours, let alone compensation for their shows,” said Xiami CEO Wang Hao. “I felt like we needed to do something to help musicians feel less lonely.”

Mr. Wang, a 36-year-old Hangzhou native who himself played in a band during college, said he hopes Xiami can boost singers just starting out as well as help established musicians do something cool and innovative.

Encouraged by the success of their initial project, Mr. Wang said Xiami plans to regularly crowd-fund shows via Taobao, including small-scale shows with fewer than 100 attendees.

But while most are positive about the prospects for crowd-funding in China, policy uncertainty concerns some pioneers in the field.

“One can hardly draw a line between illegal fund-raising and crowd-funding now due to the absence of related regulation,” Mr. Wang said. “I feel like it is a sword hanging above my head with the potential of dropping at any minute.”

Illegal fund raising in China is a vaguely defined term that includes everything from running pyramid and Ponzi schemes to operating an underground bank that falls afoul of local officials. The offense can be punishable with the death penalty if the amounts involved are large enough. Small-scale loan sharking and other informal lending activity are tacitly permitted in China, as long as they are relatively small and low-key.

Social mentality is another headache. “The atmosphere in China that encourages innovation and integrity is not as strong as that in the U.S., “said Mr. Zhao of musikid.com, adding that investment capital may be less enthusiastic about pouring money into the China crowd-funding market than in other fields like group-buying websites.

“The general consumption mentality of Chinese people is more about how to save money instead of giving money to support others,” Mr. Wang said. “It will take time for people to get used to this new method and for the market to grow.”